Nike has announced plans to reduce its reliance on Chinese manufacturing for products destined for the U.S., aiming to alleviate the burden of steep tariffs introduced under U.S. President Donald Trump.
These tariffs could potentially cost Nike an additional $1 billion, company executives noted during a post-earnings call.
Currently, around 16% of Nike’s U.S.-bound shoe imports come from China, said Chief Financial Officer Matthew Friend. However, by May 2026, the brand plans to reduce that number to a “high single-digit percentage range” by redistributing production to other nations.
“We will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind into the United States,” Friend told investors.
Nike executives acknowledged that the U.S.-China trade dispute has heavily impacted consumer goods. To address the cost spike, Nike is implementing corporate cost reviews and has already increased U.S. product pricing.
“The tariff impact is significant. However, I expect others in the sportswear industry will also raise prices, so Nike may not lose much share in the U.S.,” said David Swartz, an analyst at Morningstar Research.
Nike’s pivot toward sport-focused innovation appears to be yielding results. The running shoe category, which had struggled in recent quarters, returned to growth in Q4. The company has been doubling down on popular models like Pegasus and Vomero, while scaling back production of older classics such as the Air Force 1.
“Running has performed especially strongly for Nike,” stated Citi analyst Monique Pollard, highlighting how newer products are compensating for declines in Nike's traditional sneaker lines at wholesale partners.
Nike also ramped up marketing spend by 15% year-over-year. A notable campaign was the Paris event where Nike athlete Faith Kipyegon attempted a sub-four-minute mile. While she didn't achieve the milestone, she set an unofficial new record, drawing global attention.
Despite ongoing challenges, Nike’s financial results were stronger than anticipated. The company forecasted a mid-single-digit decline in Q1 revenue, faring better than analyst predictions of a 7.3% drop (per LSEG data).
In Q4, Nike reported $11.10 billion in sales, representing a 12% decline, but still above expectations of a 14.9% fall to $10.72 billion. Inventory remained steady at $7.5 billion as of May 31.
China remains a concern, with executives noting that a recovery in the region will be gradual, due to challenging economic conditions and increased competition.
Nike’s decision to reduce its reliance on Chinese manufacturing for U.S.-bound products reflects a strategic response to mitigate rising costs from Trump-era tariffs. By 2026, the company plans to reallocate production from China to alternative countries, potentially lowering exposure from the current 16% to a high single-digit percentage.
While the tariff hit could be as high as $1 billion, Nike is banking on increased product prices and corporate cost reviews to absorb the shock. Encouragingly, Nike’s performance in Q4 beat expectations, with the running segment returning to growth thanks to renewed investments in models like Pegasus and Vomero.
The brand is also ramping up marketing initiatives, exemplified by high-profile athletic events. While challenges in China persist, the overall outlook appears cautiously optimistic. With a better-than-expected revenue forecast for the next quarter and a diversified production plan underway, Nike is positioning itself to navigate geopolitical pressures while staying competitive in the global sportswear market.